California Supreme Court to decide if fired workers can sue employers for defamation

A PG&E lineman said his warnings that company equipment could cause wildfires led to backlash and lies about falsified timecards that cost him his job. He won a $2.1 million defamation award from a Napa County jury, even though the jury rejected his whistleblower retaliation claims. 

A state appellate panel reversed, holding 2-1 that the lineman's "claim for defamation is a claim for wrongful termination by another name."

Now the case has arrived at the state Supreme Court, where PG&E's defense lawyers say they're trying to block a novel tactic by the plaintiff bar--wrongfully disguising wrongful termination claims as defamation. 

Elena R. Baca, the Paul Hastings LLP employment and labor practice group chair who represents PG&E, said the question is important. As she framed it, after a company investigates and fires an employee, "Can the employee argue that 'the investigator lied and defamed me'?"

At trial, Baca won defense verdicts for PG&E on the retaliation and whistleblower claims. "But the judge let the plaintiff argue the defamation theory, and the jury found defamation and awarded damages," she said.

The appellate panel majority rejected that outcome, finding that defamation was not available as a separate cause of action because the "defamation claim was premised on the same conduct that gave rise to [the plaintiff's] termination and the damages sought were solely related to his loss of employment."

 That was wrong, countered the appellate lawyers for plaintiff Todd Hearn as they persuaded the high court to grant review. The majority "erred by creating an absolute, non-textual immunity for defamatory employer conduct that has never been endorsed by the Legislature or this Court in the 150 years since defamation was codified," wrote Monique Olivier of Olivier & Schreiber PC, representing Hearn, in the opening brief she filed Aug. 25. Hearn v. Pacific Gas & Electric Co., S289581 (Ca. S.Ct., rev. granted May 14, 2025).

In an email, Olivier repeated her assertion that Hearn's complaint represents no new tactic. "There is no employer exemption to liability for defamation when an employee proves that an employer published malicious false statements, which everyone agrees occurred here.  The only 'ploy' is PG&E's attempt to circumvent the Legislature by raising an unsupportable argument after the jury found in Plaintiff Hearn's favor."

Underscoring the high stakes involved in deciding whether defamation claims are available to fired employees like Hearn, Baca's challenge to the verdict at the 1st Appellate District drew a friend of the court brief from The California Employment Law Council, a pro-employer group.

Backing the plaintiff's view was law professor Orly Lobel, the director of the Center for Employment and Labor Policy at the University of San Diego School of Law. "Defamation claims in employment termination contexts are neither new nor rare," she emailed. 

"They can be brought in addition and on top of wrongful termination claims. There are however strong defenses in defamation--truth is an absolute defense, but even false information can be a defense when it is in the context of a legitimate business conversation and not abused by malice or over sharing."

According to Hearn's lawyers, malice was behind PG&E's effort to terminate him for questioning the fire safety of devices called "Tripsavers" that the utility installed in high -risk areas starting in 2016. After the 2018 wildfires had devastated the region, PG&E began disabling the devices, the plaintiff lawyers said, and began investigating Hearn.

One of Hearn's critics was a superintendent known as a bully who grew visibly angry about safety complaints and ordered an investigation that cleared Hearn, then a second probe that found Hearn violated PG&E's code of conduct by falsifying timecards and other workplace infractions. These were false statements that were defamatory, caused reputational harm and emotional distress, the lawyers said in court papers.

At trial, the jury found that Hearn's supervisor acted with malice, that at least one of his statements was not substantially true and that he harbored either hatred or ill will toward Hearn. It awarded Hearn $1,569,417 in special damages and $600,000 in general damages.

"Employment is contractual," said Baca, the defense lawyer. "You shouldn't be able to convert that into a defamation claim. Investigations are common, and if you allow employees to attack investigations, we won't be able to function." Baca's answering brief is due Oct. 20.